Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (37056)	5/19/2002 10:30:18 PM
From: Johnny Canuck	Respond to of 70308

The VIX dropped on Friday. This action has it stretching more than 10% away from its 10-day moving average (a). Research has shown that when this occurs, the market usually sells off over the next few days. This is the basis for the CVR III system that I co-created with Larry Connors. So what do we do? The Nasdaq still looks like it's stalling while the S&P has managed to put in two decent days. The CVR III sell signal, which tends to lead the market (sort of like an "overbought"/"oversold" indicator), suggests we are due for a sell off. Therefore, I suppose I'm going to stay chicken. On the long side, look for stocks in sectors that have outperformed the market as of late such as banks and healthcare--HMOs or issues such as gold which can trade contra to the indices. On the short side, look for opportunities in technology sectors that are in strong longer-term downtrends such as biotechs. No matter what you do, you might want to keep it light and wait for entries because it's choppy out there. hardrightedge.com

To: Johnny Canuck who wrote (37056)	5/19/2002 10:59:37 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70308

. MONEY FLOW TRADER'S CORNER Editor's Note: This is a section devoted to our short to medium term trading service, THE MONEY FLOW WEEKLY. Each week in this section we'll update you on the trading methods and results of Dr. Edward Saltzberg, the editor of THE MONEY FLOW WEEKLY. You'll get Dr. Saltzberg's latest thinking on the macro-economic picture on Wall Street and where he sees the strongest and weakest money flows taking the stock market near term. You'll also get some of Dr. Saltzberg's good trading ideas for the coming week. MARKET COMMENTARY We are hoping for a sustained rally because it is easier to make money in a market that moves predictably in one direction. The recent rally has been driven by news of improved product demand from key firms in the technology industry and overall improving fundamentals for the economy. One encouraging sign over the past few days was the breadth of the Sectors leading the surge. They were Printed Circuit Boards, Recreational Goods, Entertainment, Information Technology Services, Biotechnology, Internet Software and Services and Iron & Steel. The losers were also pretty diversified and included Internet Service Providers, Long Distance Carriers, Oil & Gas Drilling and Exploration, Tobacco Products, Oil & Gas Equipment and Services and Silver. The indices that we watch closely also have had a good few days. The Nasdaq, Morgan Stanley Cyclical Index, Russell 2000 and S&P Small Cap 600 have each gained about 3% or more. However, resist thoughts that an economic recovery will translate into a major burst for the markets. Here is why: Fundamentally, profit levels among last decade's largecap leaders are still low, which means price-to-earnings ratios (even despite the massive market downturn we've seen in recent years) are still high. Moreover, due to greater perceived risk and investor caution, the markets are not likely to assign the old high PE's to these stocks now. This will put a lid on the major indices. Technically, even large percentage increases in prices for fallen leaders and the major indices are not powerful enough to drive price momentum because resistance to the moves is very high. This means that sellers flood the market as prices rise because they are trying to recover some of their big losses from the past few years. The reason that small and midcap stocks have done so well over the past months is that their shareholders are not desperately looking for the exits on each price increase. Therefore, the prices of these stocks can continue to rise. That is why we continue to look at the small and midcaps for Long positions.